Strict time limit for Section 54F exemption upheld; delayed investment beyond the statutory period was not allowed.

Section 54F exemption was denied where the assessee invested in the new asset beyond the prescribed three-year period from the transfer of the original asset. The Tribunal applied the proviso to section 54F(4), holding that unutilized amounts in the Capital Gains Account Scheme must be applied within the statutory time limit, failing which they become chargeable under section 45 on expiry of that period. It also held that exemption provisions must be construed strictly and the time limit cannot be extended on equitable grounds. The assessee's plea of delay due to circumstances beyond control failed for want of supporting evidence, and the disallowance was upheld.

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Issues: Whether the assessee was entitled to deduction under section 54F of the Income-tax Act, 1961 for investment made beyond the stipulated three-year period from the date of transfer of the original asset.

Analysis: The proviso to section 54F(4) requires the unutilized amount deposited in the Capital Gains Account Scheme to be applied for purchase or construction of the new asset within the period specified in section 54F(1), failing which the unutilized amount becomes chargeable under section 45 in the year of expiry of the three-year period. The assessee claimed that the delayed payment was caused by circumstances beyond control, but no supporting evidence was furnished before the Tribunal. The Tribunal also agreed with the view that exemption provisions must be construed strictly and that the prescribed time limit cannot be extended on equitable considerations.

Conclusion: The assessee was not entitled to deduction under section 54F for the delayed investment, and the disallowance was upheld.

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